Zhejiang East-Asia Pharmaceutical Co.Ltd(605177) : the technical transformation and upgrading project completed production and commissioning, and the net profit resumed growth in the fourth quarter of last year

On March 31, Zhejiang East-Asia Pharmaceutical Co.Ltd(605177) ( Zhejiang East-Asia Pharmaceutical Co.Ltd(605177) ) disclosed the annual report of 2021. During the reporting period, affected by multiple factors such as the shutdown of production capacity and technical transformation projects of subsidiaries, covid-19 epidemic and the rise of raw material prices, Zhejiang East-Asia Pharmaceutical Co.Ltd(605177) operating income and net profit decreased in different proportions. Nevertheless, the company still dished out a dividend plan of 2 yuan (including tax) for every 10 shares, and will pay a total cash dividend of 22.72 million yuan, which is also the second consecutive year since the company was listed in 2020.

The annual report shows that although the annual profit declined, the main operating revenue of Zhejiang East-Asia Pharmaceutical Co.Ltd(605177) the fourth quarter was 240 million yuan, up 17.41% year-on-year; The net profit of the parent company in the quarter increased by 1519312% year-on-year. The company said that the ceftizoxime sodium intermediate production line project, which has been discontinued and expanded since October 2020, has been put into production and commissioning in September 2021, and the revenue and profit in the fourth quarter have been reflected.

It is reported that the technical transformation project of cefazoxime sodium intermediate production line is a sub project of Zhejiang East-Asia Pharmaceutical Co.Ltd(605177) listed fund-raising project. The original workshop of the production line has been built for many years, the equipment is old, the order demand of some products exceeds the existing production capacity of the company, and the insufficient production capacity leads to the limited expansion of the company’s leading products and market development. Therefore, the company upgraded the production line in October 2020 and put it into commissioning in September 2021. Workshop 01, where the ceftizoxime sodium intermediate production line is located, was shut down and expanded, resulting in a year-on-year decrease in the operating income of ceftizoxime sodium intermediate, reaching 84.64%. Before the shutdown, the business income accounted for 15% of the company’s overall operating income. After the above projects are officially completed, they will enter the production capacity release period, or bring boosting effect to the company’s future performance.

Market analysts believe that focusing on the upgrading of main industry capacity and solving the shortage of capacity are still the primary problems to be solved since Zhejiang East-Asia Pharmaceutical Co.Ltd(605177) listing. Under the background of “limited resistance”, the production capacity of cephalosporin antibiotics market is cleared, and cephalosporin intermediates and preparation products are concentrated in high-quality varieties Zhejiang East-Asia Pharmaceutical Co.Ltd(605177) as a leading enterprise in the field of chemical raw materials and pharmaceutical intermediates in the antibacterial field, upgrading the original production line and covering the capacity gap is an important measure for the company based on the long term.

In recent years, the development of API industry has been supported by a number of national policies. On November 9, 2021, the two ministries and commissions issued the notice on the implementation plan for promoting the high-quality development of API industry, which proposed to vigorously develop characteristic API and innovative API, increase the proportion of new products and high value-added products, encourage the integrated development of API preparation, and guide API enterprises to develop preparations based on advantageous varieties. The integration of API preparation has become the general trend of the development of upstream pharmaceutical industry.

More importantly, under the influence of factors such as the steady progress of national drug centralized purchase and the acceleration of generic drug consistency evaluation, the integrated operation mode of “API + Preparation” is also more conducive to manufacturers to effectively control the production cost of raw materials, resist the risk of product price decline, form an intensive effect and improve the high-quality development of the industry.

Zhejiang East-Asia Pharmaceutical Co.Ltd(605177) said that under the premise of paying close attention to the development trend of international API and pharmaceutical intermediate industry, the company will continue to optimize and integrate the existing resources of the company, develop products with high technical barriers and high added value, and gradually carry out the production of pharmaceutical preparations to realize the integrated development of high-end API, characteristic intermediate and preparation.

In addition, Zhejiang East-Asia Pharmaceutical Co.Ltd(605177) in its annual report, disclosed 19 major research and development projects, including antibacterial drugs, antipyretic, analgesic and anti-inflammatory drugs, gastrointestinal motility enhancers and other products, which are currently in the research and development stage.

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